Q&A: Master of reinvention
For Arthur P. Haag, president and CEO of Neutrex Inc., slowing down after a distinguished career in the specialty chemicals industry was just not part of the plan. After a brief retirement from Phillips Petroleum Co., he turned entrepreneur, developing three ventures involving medical diagnostic testing, advanced temperature instruments and nuclear testing. In 1992, at age 63, he returned to the plastics industry and founded Neutrex. He has spent the subsequent years building the family business into a major supplier of purging compounds.
The path to Neutrex, which manufactures Purgex, was a case of good timing. Coinciding with the growth of the PP industry, Haag’s career beginnings provided the technical background that has made possible his entrepreneurial second act.
In 1953, Haag went to work for Stauffer Chemical Co., which supplied titanium trichloride to serve as the Ziegler-Natta catalyst for the world’s first isotactic PP plant, which became operational in 1957.
In 1966, Haag started his first business venture, co-founding and serving as president of PureChem Corp., where he designed processing equipment and patented technology for titanium catalysts. He negotiated the sale of PureChem to Dart Industries in 1970, serving as president of the company’s Catalyst Division. In 1982, Dart sold the Catalyst Division to Phillips Petroleum, which made it part of its subsidiary, Catalyst Resources Inc. Haag continued as president of the subsidiary until his “retirement” in 1986—a brief respite before taking his entrepreneurial plunge.
Haag recently answered questions for Plastics Machinery Magazine. He spoke with contributing writer John DeGaspari.
Why did you decide to come out of retirement and start your own business?
HAAG: I was 63 and I was in pretty good shape, and I thought I am going to need something to keep me interested and going. I liked chemistry and I liked the specialty chemical business; I thought if I could get something small going, it would be a rocking chair business. However, what amazed me was the broad number of applications in which Purgex satisfied a need. This led to our break-even point being much sooner, which in turn accelerated the early growth of the business.
Was there an “aha” or “eureka” moment, when you realized that you had discovered a big demand for the purging compound?
HAAG: Twenty-three years ago, when I first realized that the U.S. was far behind in the use of purging compounds, it was very apparent there was a large need to generate an awareness of their benefits. Entry into this market looked very promising and inventions and innovation followed, proving to be a very exciting and worthwhile pursuit to this day. The commercial purging compound niche has allowed me to combine my scientific and technical mindset with my love for sales and teaching. It is still very gratifying to hear reports of our customers’ material and labor cost savings with Purgex and to continue perfecting the product line to meet their needs.
What was the transition like, moving from Dart and Phillips to starting a small business?
HAAG: It was a very inspiring experience for me, because I not only learned a lot about good business practices at Dart Industries, but also from colleagues at different specialty chemical companies. It was a very exciting time seeing all of these operations grow, and also the resin business right beside it.
Describe one of your visits to a molding plant during the early days of your business.
HAAG: I was late for an appointment at a California molding plant with the plant manager.
When I got there, he showed me a machine that he had just purged out with a competitor’s material. He said, ‘Look at how white it is.’ I said, ‘That’s pretty good; just take a handful of my Purgex.’ He put a handful of my Purgex in there and out came a bunch of black specks. He took my bag of Purgex and we went to three other machines in the plant. We put a handful in each one of them, and each one had black specks coming out. I began to really believe in this product and pursued it and got active, and it’s been going strong ever since.
How was Purgex invented? There’s a story that you cooked up your first compound on the kitchen stove.
HAAG: When I was formulating the product, I had to make sure that there wasn’t any kind of chemical reaction that was explosive. I would take small quantities of the materials and mix them in various proportions. I would put them in my oven at home, and would see how they would melt and if they would react with each other violently, and if they were compatible with each other. I did a lot of materials testing there, and ended up with a pretty good product.
How did you come up with the original formulas for the purging compound?
HAAG: I followed the PP market because I was selling a catalyst to that market. In order to sell PP, you have to have a very complete proto-
type laboratory to test the PP for market applications, and for the plant to support research. While at Dart, we had quite a laboratory in Paramus, N.J., and having that experience aided me in the development of the purging compound. We still have a very active laboratory, where we actually have a couple of injection molding machines and an extruder, where we test our new products that we develop [and] our competitors’ products.
What was the molders’ view of purging compounds in the early years?
HAAG: They were using primarily virgin resin and also regrind [to purge]. Both of them would take much longer to clean the machine, so they would have reduced production of parts that they were interested in selling. It didn’t take them too long to realize that [with purging compound] they got more throughput out of the machine, used less resin and had less cost. Keeping a machine clean and well maintained is very important. And keeping it running, the on-stream time, if you keep it up at 95 percent or so, that machine’s lifetime is going to produce a lot more money.
We were able to make money every month, but we had a tight budget. A lot of our growth was word of mouth.
How many people did you have working for you initially at Purgex?
HAAG: We had two people the first year, and maybe four the second year, and it just kept on growing every year, [and] we’d add a couple of people. We are still a small company, but we are worldwide. We have 20 or 25 distributors through-
out the world, and we are selling in 40 countries.
Do you still get involved testing your products and experimenting with new formulas?
HAAG: Absolutely. That’s my biggest function here, actually. I spend probably 80 percent of my day just working with people in the lab, formulating and testing new products and applying them to different applications in the molding industry. It has been very gratifying. We’ve learned a lot about purging, no question about that.
How do you work with molders? Comment on some of the challenges they face.
HAAG: We work directly with the plants. We distribute a tremendous number of samples. We send our people to the plant to run the tests, so that the material is properly used, in an optimized sense, from the beginning. Why wait? Usually it takes a long time to optimize something, and they can benefit from the work that we have developed here in the laboratory. Most mold shops are busy; the big ones are running 24/7 and have all kinds of challenges. We generally know what they are after; we know what the main benefits are that they need to get, and we show them their cost- benefit, etc., and they appreciate that.
How important is testing to the product development process?
HAAG: Very important. We are one of the few companies that have a fully equipped laboratory that runs full time. We run standard tests and the same procedure is followed for all of our testing, so that we get a good comparison between our competitors’ materials and our material. Every purging compound is different. It’s difficult for the molders to make comparisons and test it on their equipment when their main objective is to produce parts.
You expanded rapidly in overseas markets. How did you manage that?
HAAG: We picked good distributors. The way we did that was through the Department of Commerce. We were able to engage in what they call Gold Key Services, which would cost a nominal amount of money. We have been very fortunate; we have some outstanding distributors.
How have new resins and resin grades influenced product developments on your end?
HAAG: TPO is one example in the last several years. It’s a customized product. We test it immediately in our laboratory for how effectively our product can clean it out, for various colors in different percentages. We get a good profile on these products, so when we run them in the field, we can help the customer right there.
How would you like to be remembered?
HAAG: As someone who did not squander the boundless opportunity my German immigrant parents exposed me to in this great country. Even though their early success in Chicago was wiped out in the Great Depression, their perseverance taught me lifelong lessons that I hope my grandchildren will inherit. Their entrepreneurial spirit and love of discovery was ingrained in me and led to my obtaining a very worthwhile education, a pioneering career in plastics ... and a passion for worldwide travel. Work hard, embrace technology, invest in people, keep mind, body and soul fit, and success will follow.